What would the goal(s) of a central bank be in raising the domestic interest rate through open market operations? Can you relate your answer to recent Federal Reserve Bank policy in the United States? Does the effect that this policy has for the nominal exchange rate and trade balance increase or decrease the likelihood of the central bank achieving its goal(s)?
Macroeconomics Bilateral Spot exchange rate Currency (S)Surplus SS S2Se S1 DeficitDDForeign Currency In the Short run, the demand and supply shall determine the price of the foreign currency.